In Arizona, The Scandals Keep On Coming

Arizona is fast becoming the sinkhole of American politics. Three years back, Governor Evan Mecham stirred outrage with his racist barbs, then was impeached amid charges of campaign finance irregularities. The Arizona undertow also has claimed seven state legislators, caught in an influence-peddling sting, as well as U. S. Senators Dennis DeConcini and John McCain, embroiled in the Charles Keating scandal. Now, it may be the turn of new Governor J. Fife Symington, barely seven months after he took office.

The 46-year-old Republican, a wealthy land developer and cousin of former U. S. Senator Stuart Symington (table), was narrowly elected in February. A former Air Force captain who raised money to recall Mecham, Symington was seen as a perfect candidate to help polish Arizona's dingy political image. Then the sinkhole opened: A report by the Resolution Trust Corp., the agency in charge of cleaning up the savings-and-loan mess, was obtained by The Washington Post. The report accuses Symington of "blatant self-dealing." It charges that he received preferential treatment in launching a $250 million retail and hotel development while he served on the board of a now-failed thrift that invested in the project.

'UPHILL FIGHT.' Damage from the report spread fast. "We all thought he was the white knight who would ride in to clean up this state," says Earl de Berge, research director of Phoenix-based pollster Behavior Research Center. "Now he's got an uphill fight to convince voters he's not like all the rest."

Symington's problems stem from his 12-year stint as director of Phoenix' Southwest Savings & Loan Assn. The bailout of the thrift, seized by federal regulators in February, 1989, will cost taxpayers an estimated $941 million. Its portfolio includes Symington's Camelback Esplanade, a 19-acre project he developed in Phoenix. The thrift, which retains an 18% stake in the project, has written down $52 million on its investment. The RTC report charges that Symington put only $432 of his own money into the project and used his status as a director to obtain a 22% interest in the project and an $8 million developer's fee.

Just back from a business trip to Tokyo, Symington labels the RTC report "the skewed opinion of one person" and "a blatant attempt to smear me." Symington says he put $400,000 of his own money into the project and guaranteed loans for $9 million more. Southwest, he says, got $30 million in profits for its initial $25.9 million investment in the land and would get millions more if the project were to be sold. Moreover, his fees, which he calls standard for the industry, amounted to $2.2 million from Southwest. The remaining $5.8 million came from Japanese investors. Finally, Symington stresses that construction of the project began in 1987, three years after he left the thrift's board.

The charges themselves aren't new. In February, just as Symington and former Phoenix Mayor Terry Goddard headed into the final round of gubernatorial voting, the Senate antitrust subcommittee published a lengthy report that accused Symington of violating federal conflict-of-interest regulations in the deal.

At the time, Symington dismissed the charges as political gamesmanship. But it's no game now: The House Banking Committee's oversight panel has ordered hearings on the transaction. And even Symington's associates expect the RTC to file a civil action against Southwest's board. "The question is how far back they intend to go, and whether they'll go back to the governor," says Jay Wiley, Symington's Phoenix attorney.

SOME HIGH MARKS. Symington could face further problems. The RTC is investigating Salt Lake City-based American Savings & Loan Assn., on whose board the governor sat for four years in the mid-1980s. Some personal investments are also doing poorly. Symington's lawyers are scrambling to refinance three of 12 real estate limited partnerships in which Symington is involved.

Like dozens of other real estate developers, Symington has been done in by Arizona's depressed real estate market. Yet his personal problems haven't hobbled his political performance, at least not yet. He is given high marks for pushing through the state's $3.5 billion budget without raising taxes and for ending a hazardous-waste controversy by buying out and then closing down an incineration project.

Still, Symington is vulnerable. "The question is," says state Democratic Party Executive Director Melodee Jackson, "can he continue to run the state with one hand and work out his own finances with the other?" If he can't, the sinkhole can easily accommodate another victim.